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Monday, July 23, 2012

Bin Hammam audit opens Pandora’s Box

An
independent auditor's report into financial management of the Asian Football
Confederation (AFC) by its disgraced Qatari president has set the stage for
major investigations by Malaysian judicial authorities and international soccer
bodies into governance of world soccer and the awarding to Qatar of hosting
rights of the 2022 World Cup, the world's biggest sporting event.

The report
by PriceWaterhouse Cooper (PWC) of disgraced former FIFA vice president
Mohammed Bin Hammam who was last week suspended for 30 days as head of the
Asian Football Confederation (AFC) as a result of the report suggests cases of money
laundering, tax invasion, bribery and busting of US sanctions against Iran and
North Korea.

The report
provides the Kuala Lumpur-based AFC with the reasonable suspicion of a legal
offence that it under Malaysian law is obliged to report to authorities. It
also leaves the AFC with little choice but to launch a full-fledged
investigation of its own. The AFC, which
has Malaysian nationals, including a member of a royal family on its executive
committee, can extend Mr. Bin Hammam’s for a maximum of another 20 days, ten of
which must be used to prepare a case against him.

The report
coincided with a verdict last week by the Switzerland-based Court of
Arbitration of Sport (CAS) that acquitted Mr. Bin Hammam of charges that he had
bought votes for his failed challenge last year of Mr. Blatter in the soccer
body’s presidential election. The court
said FIFA had provided insufficient evidence but went out of its way to state
that its verdict was not a declaration of innocence. Suggesting that it believed that Mr. Hammam
was guilty, the court effectively invited FIFA to retry Mr. Bin Hammam on the
basis of enhanced evidence.

The PWC
report, according to a source involved in AFC’s investigation of Mr. Bin
Hammam, said that it raised questions about the timing of flows of monies in
and out of AFC accounts linked to the charges that Mr. Bin Hammam had sought to
buy votes of Caribbean soccer officials in his failed challenge to FIFA president
Sepp Blatter in the soccer body’s presidential election last year. The charges
formed the basis for Mr. Bin Hammam’s ousting from FIFA and for the CAS case.

“The report
prompts questions about the flows of money from the AFC to other (soccer)
confederations that were perhaps intended to influence matters like presidential
elections or the World Cup. .. A direct link appears to exist between the
inflow of just under $1 million into MBH’s (Mohammed Bin Hammam) sundry account
and the payment in May of $1 million at a Caribbean Football Union meeting.
That link is still a bit unclear,” the source said, adding that it would likely
be subject to further investigation.

Feeding
into imminent multiple investigations that could provide the monkey wrench to
clean up scandal-ridden world soccer is FIFA’s appointment earlier this month of
former US New York state attorney Michael J. Garcia as its anti-corruption prosecutor
to look in to the awarding of the Qatar World Cup as well as multiple corruption
scandals in recent years.

Qatar has
over the past 16 months sought to put a distance between itself and Mr. Bin
Hammam official, denying that he played a role in its bid. Sources close to the
investigations of Mr. Bin Hammam believe that the inquiries could produce a
different picture.

Mr. Bin
Hammam has consistently denied the allegations against him and vowed to keep
fighting them. In a July 18 letter to the AFC executive committee written on
AFC letterhead that was accompanied by a letter from his lawyers appealing his
AFC suspension, Mr. Bin Hammam denounced the PWC report as “mere weak theories
which are badly orchestrated exactly like the Chairman of Disciplinary Committee
verdict…Is not this conspiracy and corruption???”

PWC was
given a limited mandate and resources to do an initial, precursory
investigation of specified accounts and dealings of Mr. Bin Hammam seven months
after the AFC decided on a far-reaching restructuring designed to make the
organization more democratic and transparent as well as rollback changes that
effectively concentrated power in the Qatari’s hands. Allies of Mr. Bin Hammam
in the AFC executive committee some of which according to the PWC report dated
July 13, 2012 were beneficiaries of the Qatari’s dealings are believed to have
delayed the commissioning of the audit.

PWC warns
in the report that “it is our view that there is significant risk that: i. The
AFC may have been used as a vehicle to launder funds and that the funds have
been credited to the former President (Bin Hammam) for an improper purpose
(Money Laundering risk), ii. The AFC may have been used as a vehicle to launder
the receipt and payment of bribes.”

The report cites
a slew of unjustified and at times questionable payments to AFC executive
committee members and their families and Asian and African soccer officials and
associations as well as to Jack Warner, the disgraced head of North and Central
American and Caribbean soccer who resigned last year to escape investigation of
his alleged role in Mr. Bin Hammam’s purported bribery of Caribbean Football
Union executives. Representatives of various federations named as beneficiaries
of Mr. Bin Hammam’s largesse denied knowledge of any payments or insisted the
transactions were legitimate.

The report
further questions a $1 billion master rights agreement (MRA) between the AFC
and World Sport Group negotiated by Mr. Bin Hammam without putting it out to
tender or financial due diligence. The agreement fails, according to PWC, to
give AFC a right to audit WSG’s services or costs. “In comparison with
similar-type agreements for other sports, it appears that the current MRA may
be considerably undervalued,” the report said.

Similarly
broadcast licensing agreements with Qatar-owned Al Jazeera valued at $300
million were not tendered. PWC, noting that the contract was for a relatively
long period of eight years said there was “a risk this significant revenue
stream could be well below market rates in later years.”

The report,
a copy of which was obtained by this reporter, asserts that Mr. Bin Hammam:

n“used the AFC’s
company bank accounts to facilitate personal transactions as if they were his
personal bank accounts” with the knowledge of the soccer body’s finance
committee and under the management of AFC finance director Amelia Gan who was
fired last year after he was suspended;

nreceived in
February 2008 $12 million from Al Baraka Investment and Development Co ,
believed to be owned by Saudi billionaire Sheikh Saleh Kamel. “We understand
that the Al Baraka Group may have been a 20% beneficial owner of the WSG group”
(World Sport Group) with which the AFC signed a $1 billion master rights
agreement (MRA) in June 2009 negotiated by Mr. Bin Hammam;

nreceived $2
million from International Sports Events (ISE) in November 2008, “an entity
which is currently a 10% shareholder of the WSG Group.” The report says that
PWC’s “enquiries indicate that Mr Mohyedin Saleh Kamel, the Assistant Chief
Executive Officer (Investments) of the Dallah Al-Baraka Group may have been
(from 2005 –2009) the Managing Director of ISE;” It said that a significant
portion of these funds were subsequently transferred to Mr Hammam’s personal
and company bank accounts” in Jordan and Malaysia but that “no direct evidence
has been identified to confirm a link between the payments purportedly for the
benefit of Mr Hammam and the awarding of the MRA.”

ntransferred
$4.9 million to Kemco Real Eastate, part of Kemco Group that is allegedly owned
by Mr. Hammam

nmade
“significant and notable payments… in relation to individuals, Member
Associations, and travel and accommodation for AFC and FIFA events” for which
there “does not appear to be any clear purpose for a number of these
transactions. That is, payments were made to entities and individuals with no
corresponding explanation.”

nmade cash
payments to North Korea and Iran that could contradict international sanctions
against those two countries;

npaid “certain fines
and levies charged by the AFC to Member Associations (ie. Jordan, Syrian, Iraqi
and Lebanese Football Associations) that were borne by Mr Hammam. This appears
highly unusual. In these instances payments were not made to the individual
Member Associations. Instead, fines were charged (debited) to the sundry
debtors account as an amount due from Mr Hammam.”

n handed out some
$700,000 to family and friends, including buying suits for himself and
Confederation of African Football head Issa Hayatou who is likely to a target
of the FIFA investigation of the Qatar bid, an aiirline ticket for AFC Vice
President Ganesh Thapa’s wife and son; settling a $19,767 car loan belonging to
former AFC assistant secretary general and WSG vice president for corporate
security Carlo Nohra; purchasing for himself fitness equipment in Kuala Lumpur
and Doha; a $10,000 Bulgari watch; paying $15,000 for unspecified cargo from
Switzerland to Qatar, and shouldering the dentistry, evening gown, facial and
saloon charges of his daughters and honey moon of his son; and transferring
$100,000 to his wife with no justification.

"The
arrangement with Mr Hammam's use of the sundry debtors account is, in our view,
highly unusual and reflects poor governance. This use by Mr Hammam of the
sundry debtors account continued even after the external auditor's recommended
that it be stopped. Our review indicates that it was common belief that this
account was for Mr Hammam personally and all funds flowing through it were his
personal monies,” the report said.

"We
question why Mr Hammam would conduct his personal financial transactions
through the AFC's bank accounts when the documents we have seen indicate that
he already has several personal bank accounts in various countries," the
report said.

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About Me

James M DorseyWelcome to The Turbulent World of Middle East Soccer by James M. Dorsey, a senior fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies. Soccer in the Middle East and North Africa is played as much on as off the pitch. Stadiums are a symbol of the battle for political freedom; economic opportunity; ethnic, religious and national identity; and gender rights. Alongside the mosque, the stadium was until the Arab revolt erupted in late 2010 the only alternative public space for venting pent-up anger and frustration. It was the training ground in countries like Egypt and Tunisia where militant fans prepared for a day in which their organization and street battle experience would serve them in the showdown with autocratic rulers. Soccer has its own unique thrill – a high-stakes game of cat and mouse between militants and security forces and a struggle for a trophy grander than the FIFA World Cup: the future of a region. This blog explores the role of soccer at a time of transition from autocratic rule to a more open society. It also features James’s daily political comment on the region’s developments. Contact: incoherentblog@gmail.comView my complete profile